Alexander's is in violation of some of its loan covenants, and many suppliers have stopped shipping merchandise.

The company's loan covenants mean it is only allowed 6.6 times the amount of debt compared to earnings.

Another banker said it was his understanding that the drop in Maxwell Communication's stock had not broken any loan covenants.

Earlier this year, the airline also defaulted on some of its loan covenants, subsequently reaching new terms with the creditors.

Ranjitsinhji also came before the courts over a 1896 loan covenant in a dispute between four women and himself and three other people.

That has put the company in violation of loan covenants, giving the banks their new leverage.

In some cases, the balance-sheet change can send the company into technical default on its loan covenants.

Talks to modify certain loan covenants and increase Alexander's credit lines also seem to have stalled.

To comply with the loan covenants, the airline must have just over $1 billion in cash on hand at the end of June.

The company still has an uptapped $1.5 billion line of credit and said it was not in danger of violating any loan covenants.